How to File an LLC in Michigan

Starting a small business in Michigan is no walk in the park. One of the first and most critical decisions a busy entrepreneur like you will have, is choosing what type of business to operate and where to incorporate. 

In the Great Lakes State, a Limited Liability Company (LLC) is a popular choice among small business owners as they provide personal asset protection and pass-through taxation. Yet, it’s important to note that LLCs are only one of many possibilities for your growing small business in Michigan. S Corps and C Corps are also viable options for many small business owners.

Key Takeaways:

• Michigan is home to over 1.9 million small businesses, making it one of the top states in the country for small business ownership.

• To form an LLC in Michigan, entrepreneurs must file the necessary paperwork with the Michigan Secretary of State and pay an annual filing fee.

• It’s important to note that while the basic process is similar across states, the specifics—like filing fees and annual meeting or filing requirements—can vary.

When considering where to file your potential LLC, you should always consider the specific laws and regulations of the state you choose. In Michigan, for example, there are particular requirements you would be responsible for after filing an LLC, including ongoing compliance requirements, potential taxes, and other paperwork that you must complete to maintain your preferred tax status and personal liability protections.

According to a recent government report, Michigan is home to over 1.9 million small businesses, making it one of the top states in the country for small business ownership.[1] With such a thriving entrepreneurial environment, Michigan could be a great place to form your LLC.

So, let’s dive deeper into filing an LLC in Michigan. Keep reading as we go step-by-step into the process to help ensure your success as you consider incorporating your LLC in Michigan.

What Is an LLC Formation?

Think of an LLC business entity as a hybrid business structure that offers liability protection for its owners, also known as members, while providing tax benefits similar to a partnership. One of the main reasons entrepreneurs consider LLC formation is to protect their personal assets from potential business liabilities. 

LLCs can also offer a lot of flexibility when it comes to taxes. While LLCs in Michigan are required to pay sales tax and annual state fees, they are not subject to corporate income taxes. Owners of an LLC can choose to be taxed as a partnership, S Corp, or C Corp in Michigan, which can result in significant tax savings thanks to pass-through taxation. This form of taxation is where profits and losses are passed through to the members and reported on their personal income tax returns.

To form an LLC in Michigan, entrepreneurs must file the necessary paperwork with the Michigan Secretary of State and pay a filing fee. Once you incorporate your LLC, members must comply with ongoing compliance and annual reporting requirements. When you meet these conditions, business owners can best maintain their personal liability protections and continue to enjoy all of the potential benefits LLCs can offer owners in the state of Michigan. 

Step-by-Step Guide to Starting Your Michigan LLC

For some, starting an LLC in Michigan can feel like navigating a maze, but it doesn’t have to! With the proper guidance, it’s a breeze. In 2020, Michigan saw nearly 19,000 new businesses open up shop, showing real promise for entrepreneurs across many industries. [2]

If you want to follow that same entrepreneurial spirit, filing your Articles of Organization is the first step, and it’s surprisingly simple. Our guide will walk you through the process step-by-step. From there, it’s all about maintaining compliance, like submitting annual reports and keeping accurate financial records.

Now, it’s important to note that while the basic process is similar across states, the specifics—like filing fees and annual meeting or filing requirements—can vary. But don’t let that sidetrack you for now. We’ve got your back and will make sure you’re covered. So, keep reading, and let’s get your LLC up and running in Michigan!

Step 1: Choose a Business Name for Your LLC

When forming an LLC in Michigan, one of the initial steps is selecting an appropriate and distinctive business name. It is essential to choose a name that another business isn’t currently using and adhere to the naming guidelines set by the Michigan Department of Licensing and Regulatory Affairs (LARA).

In Michigan, you can reserve your desired LLC name by submitting a Name Reservation application to the LARA office before officially establishing the LLC.[3] The application can be submitted online, via mail, or in person. The reservation fee is $25, and once the form is received, they will reserve your name for up to six months.

Reserving the name ahead of time can ensure that your desired LLC name is available before proceeding with the official formation process, allowing you to focus on completing all your paperwork and other research until you are 100% ready to file.

When selecting your Michigan LLC name, it’s essential to consider the following:

• Adhere to the naming guidelines the Michigan Department of Licensing and Regulatory Affairs (LARA) set.

• Remember that the name must include “Limited Liability Company” or “LLC” to be accepted.

• Avoid the words “Bank,” “University,” or “Insurance” unless you have proper documentation to show you are, in fact, one of those organizations.

• Check that the name is distinguishable from existing business names on file with LARA.

• Reserve the name to ensure the desired name is available before proceeding.

• Evaluate the length, complexity, and memorability of the name.

• Reserve a domain URL with your new name.

• Conduct a trademark search to ensure another party does not already trademark the name.

To check if your desired LLC name is available in Michigan, you can start by utilizing the business name search tool provided by LARA on their website, which allows you to search for existing LLCs, corporations, assumed names, and other DBAs. Additionally, you can use the Free Business Name Search on our site. It can give you a long list of Michigan LLC names in just seconds.

Securing a Domain for Your Michigan LLC Name 

Before finalizing your LLC name with Michigan, it is also advisable to check the availability of the corresponding website domain name. Even if it isn’t an exact name match, securing a URL that reflects your brand will help your small business start to build an online presence. 

Trademarking Your Michigan LLC Name 

It’s essential to look into trademarking your LLC name to protect your brand and prevent other businesses from using it in another state. You can complete this process by following the instructions on the United States Patent and Trademark Office (USPTO) website or hiring a trademark attorney or service to advise you.[4]

Operating With a DBA in Michigan

In Michigan, a DBA, a “doing business as” name, is called a “Certificate of Assumed Name,” and you can file it with the Michigan Department of Licensing and Regulatory Affairs (LARA). The fee for filing a DBA is $25.00. An LLC can conduct business under any assumed name if a Certificate of Assumed Name is filed and endorsed by LARA.[5]

Step 2: Fill Out Michigan Articles of Organization

After choosing your desired LLC name, the next step in forming your Michigan LLC is to file your Articles of Organization with the LARA.[6] This document officially creates your LLC and is the most crucial piece of formation paperwork you must file.

Filing your Articles of Organization can be done online, by mail, or in person. The current filing fee for online filing is $50, and for filing by mail, it’s $60. It’s important to note that filing fees are subject to change and may vary based on the state.

The details you’ll need to know and write in the Articles of Organization for a Michigan LLC include the following:

• Name of the limited liability company

• Physical address

• Street address of the initial registered office

• Name of the initial registered agent for service of process

• Any additional statements or information as allowed by state law

• Delayed effective date, if applicable

• Signatures of one or more organizers

In Michigan, all LLCs must file an annual statement with the state by February 15 each year. This includes both domestic and foreign LLCs. The annual statement updates the state on company information changes, such as the names and addresses of members and managers. If you don’t file the report or the fee is not paid by February 15, there is a late filing penalty of $50.

It’s also important to note that if your LLC is a foreign LLC, you must file a Certificate of Authority in addition to your Articles of Organization. Before submitting your formation documents, it’s crucial to ensure they are complete and accurate to contribute to the timely processing of your LLC. 

Also, during the formation process, LARA will review your documents to ensure they comply with Michigan state law. After filing, it typically takes LARA a few business days to process your Articles of Organization. Once you form your LLC, you will be in good standing with the state and can conduct business legally under the name and direction of your LLC.

Step 3: Hire a Michigan Registered Agent

When forming your LLC in Michigan, hiring a trusted registered agent, also known as a resident agent, is one of the most critical steps. A registered agent is a person that receives legal documents, such as service of process papers, on behalf of your LLC. These documents can include summons, subpoenas, and other legal notices or documents as Michigan requires.

In Michigan, a registered agent must have a physical street address in the state. They will need to be available during regular business hours (Typically 9 AM to 5 PM Monday through Friday, excluding state and national holidays) to accept all legal documents as required by Michigan law. The registered agent’s address is also considered the registered office of your LLC, which is the official address on file with the Michigan Department of Licensing and Regulatory Affairs (LARA).

Using a registered agent service, you can rest easy knowing that your legal documents are in good hands. Our team is dedicated to providing fast and reliable service. We also offer a convenient online portal that allows you to view your documents safely and securely anywhere. 

Step 4: Create an LLC Operating Agreement

Creating an operating agreement for your Michigan LLC is vital in establishing how your business entity will operate internally. This written document outlines the rights and responsibilities of all the members and managers of the LLC and the company’s management structure.

You’re not required to draft an operating agreement to form your LLC in Michigan, but it is highly recommended as it acts as a legal guide for your LLC operations. You should tailor this document to your business and amend it as needed.

Consider the following details when crafting an operating agreement for an LLC based in Michigan:

• Whether your LLC will be member-managed or manager-managed

• Names of LLC owners

• Whether you have a multi-member LLC or single-member LLC

• The rights and responsibilities of all members and managers

• The management structure of the company

• Provisions for adding or removing members

• Provisions for resolving disputes

• Provisions for dissolving the LLC

It’s important to note that single-member LLCs may have a more straightforward operating agreement but can still benefit from one. You should also review and update your operating agreement as your business grows or changes.

An accurate and comprehensive operating agreement is vital to building the groundwork of your organization. We offer a customizable operating agreement service for Michigan LLCs. Our team of experts is also available to assist you with any questions about creating your LLC operating agreement. 

Step 5: File for an Employer Identification Number

Obtaining an Employer Identification Number (EIN) is crucial when properly setting up your Michigan LLC. This nine-digit number is assigned to your business by the Internal Revenue Service (IRS) for tax purposes and is necessary for various business-related tasks.[7]

One of the main reasons to obtain an EIN is to open a business bank account. That’s because most banks will require an EIN to open an account in your LLC’s name. A business bank account can help you apply for a business credit card. Additionally, if your LLC sells goods and services, you need an EIN to register for sales tax or a business license in Michigan.

Another important reason to obtain an EIN is to file taxes. As a business entity, your LLC may need to file a federal business tax return, even if it doesn’t have any employees or if you have a single-member LLC.

Let Us Handle Your LLC Paperwork

We understand the unique challenges of starting a business in Michigan and have already helped thousands of entrepreneurs like you navigate the process. Our team of experts is dedicated to making the LLC formation process as easy and stress-free as possible for Michigan business owners. With our online filing service, you can rest assured that your paperwork will be completed correctly and filed promptly. 

Don’t let the paperwork hold you back from starting your Michigan LLC. Let us handle it for you. Start your Michigan LLC today!

FAQs

How much does it cost to set up an LLC in Michigan?

Below is a list of potential costs you may encounter when setting up an LLC in Michigan, but keep in mind that prices and fees can vary depending on the type and size of your small business:

• LLC Filing fee: $50

• Annual Report fee: $25

• Legal fees for drafting an Operating Agreement: Varies

• Registered Agent Service fees: Varies

• Business licenses and permits: Varies

• Professional costs, such as accounting or legal services: Varies

It’s important to note that these costs may not be the only ones you encounter when setting up your LLC in Michigan. Other potential costs include legal fees, accountant fees, and other business expenses like office space, consultants, marketing, and more.

How is an LLC taxed in Michigan?

When it comes to taxes, an LLC in Michigan is considered a pass-through entity, meaning the business does not pay taxes on its income. Profits and losses of the LLC can instead be “passed through” to the individual members, who are responsible for reporting their share of the income on their personal tax returns. This means that an LLC in Michigan will typically file an annual report with the state, and the members will file their individual tax returns.

What are the benefits of a Michigan LLC?

A Michigan LLC could offer you and your small business a variety of benefits, including:

• Personal asset protection from any debts or liabilities incurred by the business

• Flexibility in management and ownership structure , including the option to be managed by its members or appointed managers. Michigan LLCs can have any number of members, making it a suitable choice for single- and multi-member businesses

• Pass-through taxation , meaning that Michigan LLCs’ income and losses could be passed through to its members and reported on their personal tax returns rather than being subject to corporate income tax

• Option to be taxed as a corporation , which in Michigan means that an LLC would be subject to the corporate income tax rate, which is a flat 6%

• Ease of compliance with simple annual filing requirements in the state of Michigan

• Strong economic environment. Michigan offers many opportunities for businesses to grow and thrive. The state’s skilled workforce and wide range of industries make it an attractive location to start and grow a business. [8]

How do you dissolve an LLC in Michigan?

If and when you need to dissolve a Michigan Limited Liability Company (LLC), the owners or members must file a form known as the Certificate of Dissolution. You must submit it to the Michigan Department of Licensing and Regulatory Affairs (LARA) and pay the $10 filing fee.

A few things can trigger the dissolution of an LLC in Michigan. These include:

• Setting a specific date for dissolution in the LLC’s Articles of Organization

• Triggered by an event outlined in the LLC’s Articles of Organization

• Decided by a unanimous vote of all members with voting rights

• With a court-ordered dissolution

When dissolving an LLC in Michigan , be sure to also resolve any outstanding debts, taxes, or legal obligations for the organization before proceeding. 

Bibliography:

1. Office of Governor Gretchen Whitmer. “Whitmer Announces New Data Showing Record Small Business Growth.” Press Releases. May 16, 2022. https://www.michigan.gov/whitmer/news/press-releases/2022/05/16/whitmer-announces-new-data-showing-record-small-business-growth. Accessed April 11, 2024. 

2. Small Business Administration. “Small Business Economic Profile - Michigan.” August 2021. https://advocacy.sba.gov/wp-content/uploads/2021/08/Small-Business-Economic-Profile-MI.pdf. Accessed April 11, 2024.

3. Michigan Department of Licensing and Regulatory Affairs. “Michigan Limited Liability Company Act.” August 15, 2008. https://www.michigan.gov/-/media/Project/Websites/lara/cscl/Folder5/540_08-15.pdf?rev=fccf450b0204423597baffdb3b5ad2dc. Accessed April 11, 2024.

4. United States Patent and Trademark Office. https://www.uspto.gov/. Accessed April 11, 2024.

5. Michigan Department of Licensing and Regulatory Affairs. “Limited Liability Company (LLC).” https://www.michigan.gov/-/media/Project/Websites/lara/cscl/Folder1/BCS_CD_265.pdf?rev=13f5ad895f35453a9c778598fba72aec#:~:text=MCL%20450.4705a.-,Fee%20%2D%20%24100.00%20per%20Michigan%20limited%20liability%20company.,form%20CSCL%2FCD%2D550m. Accessed April 11, 2024.

6. Michigan Department of Licensing and Regulatory Affairs. “Forms for Business Entities.” August 15, 2008. https://www.michigan.gov/lara/-/media/Project/Websites/lara/cscl/Folder3/700_08-15.pdf?rev=167b3f08240d40d2b5dcd988da7ff573&hash=5C7365BF9C920A8967C1C76AF5B33EA5. Accessed April 11, 2024.

7. Internal Revenue Service. “Apply for an Employer Identification Number (EIN) Online.” https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online. Accessed April 11, 2024.

8. Michigan Economic Development Corporation. “Why Michigan.” https://www.michiganbusiness.org/why-michigan/. Accessed April 11, 2024.